In just a few short weeks, President Bushs Bankruptcy Abuse Prevention and Consumer Protection Act will take effect. In a nutshell, the new law, which goes into effect on October 17, 2005, makes it more difficult to cancel your debts under Chapter 7 Bankruptcy protection. Instead, consumers will find themselves having to file for Chapter 13 Bankruptcy protection and paying back their creditors over a five year period.
Heres a look into some of the major changes that will affect consumers choosing to file for bankruptcy after the new law goes into effect –
Qualifying – Chapter 7 or Chapter 13?
To be able to qualify for protection under Chapter 7 bankruptcy, consumers will have to face a means test. The means test determines if your household falls above or below the median income in the state where you reside. Those whose total is greater than the state median income will not qualify to cancel debts under Chapter 7 protection and will alternately have to file under Chapter 13 and pay back your creditors.
The major intent of bankruptcy reform is to require people, who can afford to make some payments towards their debt, to make these...
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